GR 175952; (April, 2008) (Digest)
G.R. No. 175952 ; April 30, 2008
SOCIAL SECURITY SYSTEM vs. ATLANTIC GULF AND PACIFIC COMPANY OF MANILA, INC., ET AL.
FACTS
Atlantic Gulf and Pacific Company of Manila, Inc. (AG&P) and Semirara Coal Corporation (collectively, private respondents) filed a complaint for specific performance and damages against the Social Security System (SSS) before the Regional Trial Court (RTC). The complaint alleged that AG&P had proposed to settle its and Semirara’s premium and loan amortization delinquencies via dacion en pago of a Batangas property. SSS, through Resolution No. 270, approved this proposal to cover the total obligation of P29,261,902.45 as of March 31, 2001. Following this approval, the SSS restored the benefits of the member-employees and accepted regular remittances from AG&P.
However, the SSS failed to promptly prepare the necessary Deed of Assignment to formalize the property transfer. After AG&P submitted its own draft, the SSS returned a revised version over a year later, unilaterally increasing the obligation to over P40 million by adding interests and penalties accruing from the period after its approval of the dacion. AG&P demanded the waiver of these additions, attributing the delay to the SSS, and remained willing to perform the original agreement. The SSS refused unless the increased amount was paid.
ISSUE
Whether the Regional Trial Court has jurisdiction over the complaint for specific performance to enforce the approved dacion en pago agreement, or whether the case falls under the exclusive jurisdiction of the Social Security Commission as a contribution-related dispute.
RULING
The Supreme Court ruled that the RTC has jurisdiction. The legal logic hinges on the nature of the principal relief sought. While the SSS argued that the case involved the collection of contributions under the Social Security Act—a matter within the Commission’s exclusive jurisdiction—the Court found the core issue was not the collection of a debt per se. The obligation to pay contributions had already been novated by the perfected agreement of dacion en pago, which requires mutual consent, a certain object, and cause. The SSS’s Resolution No. 270 constituted approval and created a binding contract.
The controversy arose from the SSS’s failure to execute the necessary deed to implement this already-approved agreement. Consequently, the action is primarily one for specific performance—a suit to compel the SSS to honor and formalize the contract of dacion en pago. Such an action is incapable of pecuniary estimation, as the central issue is the enforcement of a contractual right, not the mere recovery of a sum of money. Incapable pecuniary estimation cases are within the exclusive original jurisdiction of the RTC. Therefore, the Court of Appeals correctly reversed the trial court’s dismissal and reinstated the case for further proceedings.